Co-op calls in private eyes to probe boardroom leaks: Hunt for directors who revealed pay secrets that led to chief's resignation

Private detectives have been hired by the embattled Co-operative Group to investigate a series of boardroom leaks that triggered last week’s shock resignation of chief executive Euan Sutherland.

He quit the group after just ten months, describing it as ‘ungovernable’. Sutherland’s resignation followed a string of leaks that culminated in his £3.6million salary being made public.

The Co-op, now headed by interim chief executive Richard Pennycook, is understood to have called in leading private investigators Kroll to pinpoint the source of the leaks.

Shock departure: Euan Sutherland

The unauthorised disclosures are widely thought to have come from one or more members of the Co-op’s 21-strong board, some of whom are understood to be resistant to reform of the discredited group and attempts to cut links to the Labour Party.

The appointment of outside investigators is a sign of how the battle lines are being drawn inside the upper echelons of the Co-op.

It is believed that the probe may in part be aimed at shocking indisciplined board members into recognising the seriousness of the situation.

In an outburst on Facebook last week, Sutherland claimed the leaks had come from board members determined to undermine him.

Details of the group’s financial losses and its plan to sell its farms business were also leaked in recent weeks.

The Co-op runs supermarkets and funeral services and it has a 30 per cent stake in the Co-op Bank. It is owned by its members and has no shareholders.

One source said: ‘There have been the very serious board-level leaks by directors. The Co-op may not have any shares but it does have rated instruments and these are market-sensitive’. This was illustrated last week when the group’s 12-year bond, due for repayment in 2025, fell by almost 5 per cent after Sutherland’s resignation.

One Co-op insider said high-level leaks had been a long-running issue and Sutherland’s predecessor, Peter Marks, had also suffered during his tenure.

The board includes 15 lay members and five members drawn from independent Co-op societies affiliated to the group, plus the recently appointed Lord Myners, who has been drafted in to carry out a review of its structure.

One Co-op insider added: ‘Independent societies account for 10 per cent of the group so they have a disproportionate hold on the board.’

The failings of lay members was exemplified last year by Methodist minister Paul Flowers, a former board member, deputy chairman of the group and chairman of the bank, who was exposed by The Mail on Sunday for buying Class A drugs.

The Co-op Group declined to comment.

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Co-op calls in private eyes to probe boardroom leaks: Hunt for directors who revealed pay secrets that led to chief's resignation